There was a lot of profit taking today as the end of the first quarter was in play and the USDCAD did exactly what it was suppose to do and gave us a nice Pinbar at a double bottom at support. (Pinbar: A long tailed bar showing rejection of price like in the D1 chart today) That ladies and gentleman is what we call a textbook setup, BUT will it hold as CAD is still very strong. Will they fool us on the first of april like a bankers practical joke? In the case of Oil, it definitely looks like it wants to drop lower, but it still hasn’t broken the 21EMA therefore we would like to stay cautious.
If you would like to attempt getting a good price on this reversal, there is one nice little trick to place a position on theses Pinbars. To limit your losses you can place an entry order at the 50% retracement of the pinbar with a stop loss below the wick of the Pinbar. For better clarity I have set up the fibonacci on the H4 Chart which represents the D1 pinbar.
In this case for example our entry would be at the 50% retracement @ 1.2934 and our stop loss would be just below the wick @ 1.285 if it goes beyond that we don’t want it. This method allows us to have a conservatively good entry in the market, let’s us calculate the amount of risk we allow ourselves to have, and best of all gets us in the market while we might be doing other things, or sleeping. The strongest Pinbar setups are usually seen in the higher timeframes H4.D1 but of course like anything else Pinbars can fail, and the market will always do what it wants.